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Uberization Of Your Backyard – Instant Debt Creation

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It did not take long for the rentier vultures to smell the carrion lying in your backyard: that dead space that used to be your garden or lawn. Those vultures are now circling homeowners trying to convince them that they can join the free market free-for-all to provide sufficient affordable housing and make money to boot. Like the Uber taxi business model, these property vultures swoop in to monetize your land for their own benefit, including rent extraction and debt serfdom. The Uber, gig-economy business model has fine-tuned a process wherein it uses you and your property (in Uber’s case, your car) to make money. By merely developing some software, they have devised a way to bind you to them like superglue and ease you into the first step of debt peonage. Before you know it, you owe your soul to the company store. But what if you don’t have an Acessory Dwellling Unit (ADU) in your back yard? Not to worry, because just like the Uber driver who doesn’t own a car, the company can provide you with one for a modest monthly fee that will be automatically deducted (raked off) from what they laughably call your income. (Some studies put that hourly Uber wage around $3.75 although others claim earnings of $12) Enterprising property entrepreneurs have now devised a business model similar to Uber for ADUs. This new business will ease you into debt by paying you a pittance to invade, not your car, but your backyard.

One of these outfits is Dweller out of Portland, Oregon, a city that never saw an Accessory Dwelling Unit it did not like. Dweller, in tried and true entrepreneurial fashion, will build that legal ADU for you if only you agree to a ground lease of 25 years that allows them to rake most of the rent off the top. This from Reditt:

“Hi friends, I read about the company Dweller… and wanted to see if anyone has actually done an ADU in their house’s backyard yet. Extra points if you live in a city/suburb with a normal-sized yard, and especially a single-family residence Arizona. Sounds too good to be true, and possibly only in Portland OR right now…not sure. TL;DR (sic) - company Dweller offers to front the $150,000 cost for an Accessory Dwelling Unit as long as you split the rent 70/30 with them and sign a 25-year lease.”

By using an easy scratch and sniff test I found this in Rent Portland Homes:

“[Patrick] Quinton is the former executive director of the Portland Development Commission and the co-founder and CEO of Dweller, a startup aimed at helping more homeowners ride the wave of ADUs affordably. Dweller fronts the cost of purchasing and installing one-size-fits-all prefabricated ADUs in backyards. Third-party property managers rent out the unit to long-term tenants, and Dweller splits the revenues 70-30 with the homeowner, almost as if the company is leasing the land.”

Almost as if leasing the land? From what turnip truck did the author fall recently?

The Portland Development Commission has since changed its name to Prosper Portland according to the Business Tribune of the Pamplin Media Group, in what appears to be an effort to rebrand and possibly shed a questionable past.

“The Portland Development Commission was created by the passage of a city ballot measure in 1958. Its primary mission then was to help redevelop parts of town deemed lagging by capturing and redirecting the increased property taxes generated by rising land values from its work into them. Although it is credited with helping transform such areas as the Pearl District and South Waterfront into thriving communities, much of its work has been controversial. For example, one of its first major project in the area around the Keller Auditorium replaced a lower-income multi-cultural neighborhood with more expensive apartment towers.”

So all is not well in Portland, but we have heard the following before, this time in CityLab

“Long-term, the idea is to help Portland keep ratcheting up its rental supply so that housing costs level out. As in many other cities, new housing development slowed to a halt during the recession, and a lot of what’s gotten built since has been on the luxurious end of the scale. As new residents keep flocking to Portland, rent prices have ticked up sharply—12.4 percent from 2014 to 2015, the highest increase in the country at that time.”

Quinton believes a total of 10,000 to 20,000 ADUs could be a good goal for the city. Jackpot for Quinton! As of 2018 there are about 1,900 units existing in Portland according to accessorydwellingunits.org. Rents are running from $1,200 to $1,500 per month according to CityLab in Portland. How is that for affordability? Given the Dweller example of a 70-30 split, the average ADU will bring in $360 to $450 per month for the homeowner. But who pays for the repairs and upkeep? What happens when you sell? What happens if the unit becomes unrentable for any reason? Read the fine print if you can find the contract. Dweller does not post that on their website. Nor do they tell you they will have an annual 8% return or more on their money courtesy of your backyard.

All of this is in the endless and ultimately fruitless search for affordable housing through the free market in which Bellingham has been engaged for well over a year. But public housing and subsidies have their limits, too. A friend writes to me, “that no city or region has the financial wherewithal (tax base) to provide affordable housing for every person who might want to move here. It’s a mission impossible. I think we’d be smart to point out the obvious so we can focus on something within our ability… subsidizing long-time Bellingham residents in need. It is not possible to subsidize new residential units for eternity. The demand for those is endless, but the resources are scarce.”

About Dick Conoboy

Editor • Member since Jan 26, 2008

Dick Conoboy is a recovering civilian federal worker and military officer who was offered and accepted an all-expense paid, one year trip to Vietnam in 1968. He is a former Army [...]

Comments by Readers

Geoff Middaugh

May 07, 2018

Excellent research, analysis and writing!   Good work!   This must be what the PC wants for Bellinghamsters.  Hopefully, the council will stop this madness.   Like the carrion, it stinks….

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Dianne Foster

May 13, 2018

Dick,  as usual,  excellent sleuthing.    Do you have any connections between Yimby and these for-profit DADU factories?

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Dick Conoboy

May 15, 2018

Dianne,

I have not looked for a connection although I would not be surprised if the YIMBYs were thrilled at the prospect.  It all fits into the neoliberal’s build ourselves out of homelessness and unaffordability meme which the YIMBYs have embraced with great abandon and misunderstanding.  Just look at the local Dems who have come out with a housing manifesto (yet to be voted by the membership) that is any developer’s wet dream although they did stumble across a couple of viable concepts.  The Dems apparently forget that the urban villages were set up to do what the Dems want to have happen but the developers have balked at the villages and now want to build their stuff whereever they like. 

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